Legalize / United Kingdom / Public General Act

Companies (Audit, Investigations and Community Enterprise) Act 2004

Type Public General Act

Publication 2004-10-28

Last updated 2025-11-18

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

Part 1 — Auditors, accounts, directors' liabilities and investigations

Chapter 1 — Auditors

Recognised supervisory bodies

Minor and consequential amendments

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Arrangements to which additional requirements for recognition relate

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Delegation of Secretary of State’s functions in relation to auditors

Delegation of functions by Secretary of State to new or existing body

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Circumstances in which Secretary of State may delegate functions to existing body

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions about delegation orders

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Auditors' qualifications

Approval of overseas qualifications for auditors

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Services provided by auditors

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 2 — Accounts and reports

Auditing of accounts

Auditors' rights to information

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Statement in directors' report as to disclosure of information to auditors

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Defective accounts

Persons authorised to apply to court in connection with defective accounts

10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disclosure of tax information by Inland Revenue to facilitate application for declaration that accounts are defective

11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power of person authorised to require documents, information and explanations

12

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Directors' reports

Power to specify bodies who may issue reporting standards

13

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supervision of accounts and reports

Supervision of periodic accounts and reports of issuers of listed securities

14

(1) The Secretary of State may make an order appointing a body (“the prescribed body”) to exercise the functions mentioned in subsection (2).

(2) The functions are—

(a) keeping under review periodic accounts and reports that are produced by issuers of transferable securities and are required to comply with any accounting requirements imposed by Part 6 rules; and

(b) if the prescribed body thinks fit, informing the Financial Conduct Authority of any conclusions reached by the body in relation to any such accounts or report.

(3) A body may be appointed under this section if it is a body corporate or an unincorporated association which appears to the Secretary of State—

(a) to have an interest in, and to have satisfactory procedures directed to, monitoring compliance by issuers of transferable securities with accounting requirements imposed by Part 6 rules in relation to periodic accounts and reports produced by such issuers; and

(b) otherwise to be a fit and proper body to be appointed.

(4) But where the order is to contain any requirements or other provisions specified under subsection (8), the Secretary of State may not appoint a body unless, in addition, it appears to him that the body would, if appointed, exercise its functions as a prescribed body in accordance with any such requirements or provisions.

(5) A body may be appointed either generally or in respect of any of the following, namely—

(a) any particular class or classes of issuers,

(b) any particular class or classes of periodic accounts or reports,

and different bodies may be appointed in respect of different classes within either or both of paragraphs (a) and (b).

(6) In relation to the appointment of a body in respect of any such class or classes, subsections (2) and (3) are to be read as referring to issuers, or (as the case may be) to periodic accounts or reports, of the class or classes concerned.

(7) Where—

(a) a body is so appointed, but

(b) the Financial Conduct Authority requests the body to exercise its functions under subsection (2) in relation to any particular issuer of transferable securities in relation to whom those functions would not otherwise be exercisable,

the body is to exercise those functions in relation to that issuer as well.

(8) An order under this section may contain such requirements or other provisions relating to the exercise of functions by the prescribed body as appear to the Secretary of State to be appropriate.

(9) If the prescribed body is an unincorporated association, any relevant proceedings may be brought by or against that body in the name of any body corporate whose constitution provides for the establishment of the body.

For this purpose “relevant proceedings” means proceedings brought in or in connection with the exercise of any function by the body as a prescribed body.

(10) Where an appointment is revoked, the revoking order may make such provision as the Secretary of State thinks fit with respect to pending proceedings.

(11) The power to make an order under this section is exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(12) In this section and sections 15A to 15E below —

“Part 6 rules” has the meaning given by section 103(1) of the Financial Services and Markets Act 2000 (c. 8) (interpretation of Part 6);

issuer” has the meaning given by section 102A(6) of that Act;

“periodic” accounts and reports means accounts and reports which are required by Part 6 rules to be produced periodically.

issuer” has the meaning given by section 102A(6) of that Act;

Application of provisions inserted by sections 11 and 12 to bodies appointed under section 14

15

(1) The provisions of sections 15A to 15E have effect in relation to bodies appointed under section 14 (supervision of accounts and reports of issuers of transferable securities).

(2) In those sections—

(a) “prescribed body” means a body appointed under that section; and

(b) references to the functions of a prescribed body are to its functions under that section.

Bodies concerned with accounting standards etc.

Grants to bodies concerned with accounting standards etc.

16

(1) The Secretary of State may make grants to any body carrying on activities concerned with any of the matters set out in subsection (2).

(2) The matters are—

(a) issuing accounting standards;

(b) issuing standards in respect of matters to be contained in reports required to be produced by auditors or company directors;

(c) investigating departures from standards within paragraph (a) or (b) or from the accounting requirements of the Companies Act 2006 or any requirements of directly applicable EU legislation relating to company accounts;

(d) taking steps to secure compliance with such standards or requirements;

(e) keeping under review periodic accounts and reports that are produced by issuers of listed securities and are required to comply with any accounting requirements imposed by listing rules;

(ea) exercising the functions of the competent authority under the Statutory Auditors and Third Country Auditors Regulations 2016 and under Regulation (EU) 537/2014 on specific requirements regarding statutory audit of public interest entities;

(eb) assessing, and reporting to the Secretary of State on, the comparability of the audit regulatory regimes of third countries to the audit regulatory regime of the United Kingdom;

(ec) assessing, and reporting to the Secretary of State on, the adequacy of third country competent authorities, in relation to their ability to co-operate with the competent authority on the exchange of audit working papers and investigation reports;

(f) establishing, maintaining or carrying out arrangements within paragraph 21, 22, 23(1) , 23A(1) or 24(1) of Schedule 10 to the Companies Act 2006;

(g) exercising functions of the Secretary of State under Part 42 of that Act ;

(h) carrying out investigations into public interest cases arising in connection with the performance of accountancy functions by members of professional accountancy bodies;

(i) holding disciplinary hearings relating to members of such bodies following the conclusion of such investigations;

(j) deciding whether (and, if so, what) disciplinary action should be taken against members of such bodies to whom such hearings related;

(k) supervising the exercise by such bodies of regulatory functions in relation to their members;

(ka) exercising functions of the Independent Supervisor appointed under Chapter 3 of Part 42 of the Companies Act 2006;

(kb) establishing, maintaining or carrying out arrangements within paragraph 1 or 2 of Schedule 12 to the Companies Act 2006;

(l) issuing standards to be applied in actuarial work;

(m) issuing standards in respect of matters to be contained in reports or other communications required to be produced or made by actuaries or in accordance with standards within paragraph (l);

(n) investigating departures from standards within paragraph (l) or (m);

(o) taking steps to secure compliance with standards within paragraph (l) or (m);

(oa) exercising functions under regulations made under section 113(3A) of the Pension Schemes Act 1993 or section 109(3A) of the Pension Schemes (Northern Ireland) Act 1993 (preparing guidance for pensions illustrations);

(p) carrying out investigations into public interest cases arising in connection with the performance of actuarial functions by members of professional actuarial bodies;

(q) holding disciplinary hearings relating to members of professional actuarial bodies following the conclusion of investigations within paragraph (p);

(r) deciding whether (and, if so, what) disciplinary action should be taken against members of professional actuarial bodies to whom hearings within paragraph (q) related;

(s) supervising the exercise by professional actuarial bodies of regulatory functions in relation to their members;

(t) overseeing or directing any of the matters mentioned above.

(3) A grant may be made to a body within subsection (1) in respect of any of its activities.

(4) For the purposes of this section—

(a) a body is to be regarded as carrying on any subsidiary activities of the body; and

(b) a body’s “subsidiary activities” are activities carried on by any of its subsidiaries or by any body established under its constitution or under the constitution of such a subsidiary.

(5) In this section—

“accountancy functions” means functions performed as an accountant, whether in the capacity of auditor or otherwise;

“audit regulatory regime” in relation to a country or territory, means the system of public oversight, quality assurance, investigations and sanctions for auditors in that country or territory;

“company” means a company as defined in section 1(1) of the Companies Act 2006;

“the competent authority” means the Financial Reporting Council Limited;

“listed securities” and “listing rules” have the meaning given by section 103(1) of the Financial Services and Markets Act 2000 (c. 8) (interpretation of Part 6);

“issuer”, in relation to listed securities, has the meaning given by section 102A(6)(b) of the Financial Services and Markets Act 2000 (meaning of “securities” etc ,);

“professional accountancy body” means—a supervisory body which is recognised for the purposes of Part 42 of the Companies Act 2006 , ora qualifying body, as defined by section 1220 of that Act, which enforces rules as to the performance of accountancy functions by its members,and references to the members of professional accountancy bodies include persons who, although not members of such bodies, are subject to their rules in performing accountancy functions;

“ professional actuarial body” means— the Institute of Actuaries, orthe Faculty of Actuaries in Scotland,and the “members” of a professional actuarial body include persons who, although not members of the body, are subject to its rules in performing actuarial functions;

“public interest cases” means matters which raise or appear to raise important issues affecting the public interest;

“regulatory functions”, in relation to professional accountancy bodies, means any of the following functions—investigatory or disciplinary functions exercised by such bodies in relation to the performance by their members of accountancy functions,the setting by such bodies of standards in relation to the performance by their members of accountancy functions, andthe determining by such bodies of requirements in relation to the education and training of their members;

“regulatory functions”, in relation to professional accountancy bodies, means any of the following functions— investigatory or disciplinary functions exercised by such bodies in relation to the performance by their members of actuarial functions,the setting by such bodies of standards in relation to the performance by their members of actuarial functions, andthe determining by such bodies of requirements in relation to the education and training of their members;

“subsidiary” has the meaning given by section 1159 of the Companies Act 2006.

“third country” means a country or territory other than the United Kingdom;

“third country competent authority” means a body established in a third country exercising functions related to the regulation or oversight of auditors.

(6) In their application to Scotland, subsection (2)(a) to (t) are to be read as referring only to matters provision relating to which would be outside the legislative competence of the Scottish Parliament.

(6A) References in this section to Part 42 of the Companies Act 2006 or to paragraph 21, 22, 23(1) or 24(1) of Schedule 10 to that Act include that Part or paragraph as it has effect by virtue of Schedule 5 to the Local Audit and Accountability Act 2014 (which applies Part 42 with modifications in relation to audits of local authorities etc).

(6B) The reference in the definition of “professional accountancy body” in subsection (5) to section 1220 of the Companies Act 2006 includes a reference to section 1219 of that Act as it has effect by virtue of Schedule 5 to the Local Audit and Accountability Act 2014.

(7) Omit section 256(3) of the Companies Act 1985 (c. 6) (grants to bodies concerned with issuing accounting standards etc.), which is superseded by this section.

Levy to pay expenses of bodies concerned with accounting standards etc.

17

(1) For the purpose of meeting any part of the expenses of a grant-aided body, the Secretary of State may by regulations provide for a levy to be payable to that body (“the specified recipient”) by bodies or persons which are specified, or are of a description specified, in the regulations.

(2) For the purposes of this section—

(a) “grant-aided body” means a body to whom the Secretary of State has paid, or is proposing to pay, grant under section 16; and

(b) any expenses of any body carrying on subsidiary activities of the grant-aided body (within the meaning of that section) are to be regarded as expenses of the grant-aided body.

(3) The power to specify (or to specify descriptions of) bodies or persons must be exercised in such a way that the levy is only payable by—

(a) bodies corporate to which , or persons within subsection (3A) to whom, the Secretary of State considers that any of the activities of the specified recipient, or any of its subsidiary activities, are relevant to a significant extent, or

(b) bodies or persons who the Secretary of State considers have a major interest in any of those activities being carried on.

(3A) The following persons are within this subsection—

(a) the administrators of a public service pension scheme (within the meaning of section 1 of the Pension Schemes Act 1993);

(b) the trustees or managers of an occupational or personal pension scheme (within the meaning of that section).

(4) Regulations under this section may in particular—

(a) specify the rate of the levy and the period in respect of which it is payable at that rate;

(b) make provision as to the times when, and the manner in which, payments are to be made in respect of the levy.

(5) In determining the rate of the levy payable in respect of a particular period, the Secretary of State—

(a) must take into account the amount of any grant which is to be or has been made to the specified recipient in respect of that period under section 16;

(b) may take into account estimated as well as actual expenses of that body in respect of that period.

(6) Any amount of levy payable by any body or person is a debt due from the body or person to the specified recipient, and is recoverable accordingly.

(7) The specified recipient must—

(a) keep proper accounts in respect of amounts of levy received, and

(b) prepare in relation to each levy period a statement of account relating to such amounts in such form and manner as is specified in the regulations.

(8) Those accounts must be audited, and the statement certified, by persons appointed by the Secretary of State.

(9) The power to make regulations under this section is exercisable by statutory instrument.

(10) Regulations to which this subsection applies may not be made unless a draft of the regulations has been laid before, and approved by a resolution of, each House of Parliament.

(11) Subsection (10) applies to—

(a) the first regulations under this section, and

(b) any other regulations under this section that would result in any change in the bodies or persons by whom the levy is payable.

(12) Otherwise, any statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of either House of Parliament.

(13) If a draft of any regulations to which subsection (10) applies would, apart from this subsection, be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not such an instrument.

Exemption from liability

18

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 3 — Directors' liabilities

Relaxation of prohibition on provisions protecting directors etc. from liability

...

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Funding of director’s expenditure on defending proceedings

20

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 4 — Investigations

Power to require documents and information

21

For section 447 of the Companies Act 1985 (c. 6) substitute—

(447) (1) The Secretary of State may act under subsections (2) and (3) in relation to a company. (2) The Secretary of State may give directions to the company requiring it— (a) to produce such documents (or documents of such description) as may be specified in the directions; (b) to provide such information (or information of such description) as may be so specified. (3) The Secretary of State may authorise a person (an investigator) to require the company or any other person— (a) to produce such documents (or documents of such description) as the investigator may specify; (b) to provide such information (or information of such description) as the investigator may specify. (4) A person on whom a requirement under subsection (3) is imposed may require the investigator to produce evidence of his authority. (5) A requirement under subsection (2) or (3) must be complied with at such time and place as may be specified in the directions or by the investigator (as the case may be). (6) The production of a document in pursuance of this section does not affect any lien which a person has on the document. (7) The Secretary of State or the investigator (as the case may be) may take copies of or extracts from a document produced in pursuance of this section. (8) A “document” includes information recorded in any form. (9) In relation to information recorded otherwise than in legible form, the power to require production of it includes power to require the production of a copy of it in legible form or in a form from which it can readily be produced in visible and legible form.

Protection in relation to certain disclosures

22

After section 448 of the Companies Act 1985 (c. 6) insert—

(448A) (1) A person who makes a relevant disclosure is not liable by reason only of that disclosure in any proceedings relating to a breach of an obligation of confidence. (2) A relevant disclosure is a disclosure which satisfies each of the following conditions— (a) it is made to the Secretary of State otherwise than in compliance with a requirement under this Part; (b) it is of a kind that the person making the disclosure could be required to make in pursuance of this Part; (c) the person who makes the disclosure does so in good faith and in the reasonable belief that the disclosure is capable of assisting the Secretary of State for the purposes of the exercise of his functions under this Part; (d) the information disclosed is not more than is reasonably necessary for the purpose of assisting the Secretary of State for the purposes of the exercise of those functions; (e) the disclosure is not one falling within subsection (3) or (4). (3) A disclosure falls within this subsection if the disclosure is prohibited by virtue of any enactment. (4) A disclosure falls within this subsection if— (a) it is made by a person carrying on the business of banking or by a lawyer, and (b) it involves the disclosure of information in respect of which he owes an obligation of confidence in that capacity. (5) An enactment includes an enactment— (a) comprised in, or in an instrument made under, an Act of the Scottish Parliament; (b) comprised in subordinate legislation (within the meaning of the Interpretation Act 1978); (c) whenever passed or made.

Power to enter and remain on premises

23

After section 453 of the Companies Act 1985 (c. 6) insert—

(453A) (1) An inspector or investigator may act under subsection (2) in relation to a company if— (a) he is authorised to do so by the Secretary of State, and (b) he thinks that to do so will materially assist him in the exercise of his functions under this Part in relation to the company. (2) An inspector or investigator may at all reasonable times— (a) require entry to relevant premises, and (b) remain there for such period as he thinks necessary for the purpose mentioned in subsection (1)(b). (3) Relevant premises are premises which the inspector or investigator believes are used (wholly or partly) for the purposes of the company’s business. (4) In exercising his powers under subsection (2), an inspector or investigator may be accompanied by such other persons as he thinks appropriate. (5) A person who intentionally obstructs a person lawfully acting under subsection (2) or (4)— (a) is guilty of an offence, and (b) is liable on conviction to a fine. (6) Sections 732 (restriction on prosecutions), 733 (liability of individuals for corporate default) and 734 (criminal proceedings against unincorporated bodies) apply to the offence under subsection (5). (7) An inspector is a person appointed under section 431, 432 or 442. (8) An investigator is a person authorised for the purposes of section 447. (453B) (1) This section applies for the purposes of section 453A. (2) The requirements of subsection (3) must be complied with at the time an inspector or investigator seeks to enter relevant premises under section 453A(2)(a). (3) The requirements are— (a) the inspector or investigator must produce evidence of his identity and evidence of his appointment or authorisation (as the case may be); (b) any person accompanying the inspector or investigator must produce evidence of his identity. (4) The inspector or investigator must, as soon as practicable after obtaining entry, give to an appropriate recipient a written statement containing such information as to— (a) the powers of the investigator or inspector (as the case may be) under section 453A; (b) the rights and obligations of the company, occupier and the persons present on the premises, as may be prescribed by regulations. (5) If during the time the inspector or investigator is on the premises there is no person present who appears to him to be an appropriate recipient for the purposes of subsection (8), the inspector or investigator must as soon as reasonably practicable send to the company— (a) a notice of the fact and time that the visit took place, and (b) the statement mentioned in subsection (4). (6) As soon as reasonably practicable after exercising his powers under section 453A(2), the inspector or investigator must prepare a written record of the visit and— (a) if requested to do so by the company he must give it a copy of the record; (b) in a case where the company is not the sole occupier of the premises, if requested to do so by an occupier he must give the occupier a copy of the record. (7) The written record must contain such information as may be prescribed by regulations. (8) If the inspector or investigator thinks that the company is the sole occupier of the premises an appropriate recipient is a person who is present on the premises and who appears to the inspector or investigator to be— (a) an officer of the company, or (b) a person otherwise engaged in the business of the company if the inspector or investigator thinks that no officer of the company is present on the premises. (9) If the inspector or investigator thinks that the company is not the occupier or sole occupier of the premises an appropriate recipient is— (a) a person who is an appropriate recipient for the purposes of subsection (8), and (if different) (b) a person who is present on the premises and who appears to the inspector or investigator to be an occupier of the premises or otherwise in charge of them. (10) A statutory instrument containing regulations made under this section is subject to annulment in pursuance of a resolution of either House of Parliament.

Failure to comply with certain requirements

24

After section 453B of the Companies Act 1985 (c. 6) (inserted by section 23) insert—

(453C) (1) This section applies if a person fails to comply with a requirement imposed by an inspector, the Secretary of State or an investigator in pursuance of either of the following provisions— (a) section 447; (b) section 453A. (2) The inspector, Secretary of State or investigator (as the case may be) may certify the fact in writing to the court. (3) If, after hearing— (a) any witnesses who may be produced against or on behalf of the alleged offender; (b) any statement which may be offered in defence, the court is satisfied that the offender failed without reasonable excuse to comply with the requirement, it may deal with him as if he had been guilty of contempt of the court.

Chapter 5 — Supplementary

Minor and consequential amendments

25

(1) Schedule 2 (minor and consequential amendments relating to Part 1) has effect.

(2) That Schedule has effect subject to the modifications set out in subsection (3)—

(a) in relation to England and Wales, in the case of an offence committed before 2 May 2022, and

(b) in relation to Scotland.

(3) The modifications are—

(a) the amendment in paragraph 10(2) has effect as if for “12 months” there were substituted “ 6 months ”;

(b) the amendment in paragraph 10(3) has effect as if for “12 months”, in both places where it occurs, there were substituted “ 3 months ”;

(d) the amendment in paragraph 26(2) has effect as if for “the general limit in a magistrates’ court” there were substituted “ 6 months ”; and

(e) the amendment in paragraph 26(3) has effect as if for “the general limit in a magistrates’ court” there were substituted “ 6 months ”.

Part 2 — Community interest companies

Introductory

Community interest companies

26

(1) There is to be a new type of company to be known as the community interest company.

(2) In accordance with this Part—

(a) a company limited by shares or a company limited by guarantee and not having a share capital may be formed as or become a community interest company, and

(b) a company limited by guarantee and having a share capital may become a community interest company.

(3) A community interest company established for charitable purposes is to be treated as not being so established and accordingly—

(a) is not an English charity or a Northern Ireland charity, and

(b) must not be entered in the Scottish Charity Register.

Regulator

27

(1) There is to be an officer known as the Regulator of Community Interest Companies (referred to in this Part as “the Regulator”).

(2) The Secretary of State must appoint a person to be the Regulator.

(3) The Regulator has such functions relating to community interest companies as are conferred or imposed by or by virtue of this Act or any other enactment.

(4) The Regulator must adopt an approach to the discharge of those functions which is based on good regulatory practice, that is an approach adopted having regard to—

(a) the likely impact on those who may be affected by the discharge of those functions,

(b) the outcome of consultations with, and with organisations representing, community interest companies and others with relevant experience, and

(5) The Regulator may issue guidance, or otherwise provide assistance, about any matter relating to community interest companies.

(6) The Secretary of State may require the Regulator to issue guidance or otherwise provide assistance about any matter relating to community interest companies which is specified by the Secretary of State.

(7) Any guidance issued under this section must be such that it is readily accessible to, and capable of being easily understood by, those at whom it is aimed; and any other assistance provided under this section must be provided in the manner which the Regulator considers is most likely to be helpful to those to whom it is provided.

(8) Schedule 3 (further provisions about the Regulator) has effect.

Appeal Officer

28

(1) There is to be an officer known as the Appeal Officer for Community Interest Companies (referred to in this Part as “the Appeal Officer”).

(2) The Secretary of State must appoint a person to be the Appeal Officer.

(3) The Appeal Officer has the function of determining appeals against decisions and orders of the Regulator which under or by virtue of this Act or any other enactment lie to the Appeal Officer.

(4) An appeal to the Appeal Officer against a decision or order of the Regulator may be brought on the ground that the Regulator made a material error of law or fact.

(5) On such an appeal the Appeal Officer must—

(a) dismiss the appeal,

(b) allow the appeal, or

(6) Where a case is remitted the Regulator must reconsider it in accordance with any rulings of law and findings of fact made by the Appeal Officer.

(7) Schedule 4 (further provisions about the Appeal Officer) has effect.

Official Property Holder

29

(1) There is to be an officer known as the Official Property Holder for Community Interest Companies (referred to in this Part as “the Official Property Holder”).

(2) The Regulator must appoint a member of the Regulator’s staff to be the Official Property Holder.

(3) The Official Property Holder has such functions relating to property of community interest companies as are conferred or imposed by or by virtue of this Act or any other enactment.

(4) Schedule 5 (further provisions about the Official Property Holder) has effect.

Requirements

Cap on distributions and interest

30

(1) Community interest companies must not distribute assets to their members unless regulations make provision authorising them to do so.

(2) If regulations authorise community interest companies to distribute assets to their members, the regulations may impose limits on the extent to which they may do so.

(3) Regulations may impose limits on the payment of interest on debentures issued by, or debts of, community interest companies.

(4) Regulations under this section may make provision for limits to be set by the Regulator.

(5) The Regulator—

(a) may set a limit by reference to a rate determined by any other person (as it has effect from time to time), and

(b) may set different limits for different descriptions of community interest companies.

(6) The Regulator must (in accordance with section 27)—

(a) undertake appropriate consultation before setting a limit, and

(b) in setting a limit, have regard to its likely impact on community interest companies.

(7) Regulations under this section may include power for the Secretary of State to require the Regulator to review a limit or limits.

(8) Where the Regulator sets a limit he must publish notice of it in the Gazette.

Distribution of assets on winding up

31

(1) Regulations may make provision for and in connection with the distribution, on the winding up of a community interest company, of any assets of the company which remain after satisfaction of the company’s liabilities.

(2) The regulations may, in particular, amend or modify the operation of any enactment or instrument.

Memorandum and articles

32

(1) The articles of a community interest company must state that the company is to be a community interest company.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) The articles of a community interest company of any description—

(a) must at all times include such provisions as regulations require to be included in the articles of every community interest company or a community interest company of that description, and

(b) must not include such provisions as regulations require not to be so included.

(4) The provisions required by regulations under subsection (3)(a) to be included in the articles of a community interest company may (in particular) include—

(a) provisions about the transfer and distribution of the company’s assets (including their distribution on a winding up),

(b) provisions about the payment of interest on debentures issued by the company or debts of the company,

(d) provisions about the voting rights of members of the company,

(e) provisions about the appointment and removal of directors of the company, and

(f) provisions about voting at meetings of directors of the company.

(5) The articles of a community interest company are of no effect to the extent that they—

(a) are inconsistent with provisions required to be included in the articles of the company by regulations under subsection (3)(a), or

(b) include provisions required not to be included by regulations under subsection (3)(b).

(6) Regulations may make provision for and in connection with restricting the ability of a community interest company to amend its articles so as to add, remove or alter a statement of the company’s objects.

Names

33

(1) The name of a community interest company which is not a public company must end with—

(a) “community interest company”, or

(b) “c.i.c.”.

(2) In the case of a Welsh company, its name may instead end with—

(a) “cwmni buddiant cymunedol”, or

(b) “c.b.c.”,

...

(3) The name of a community interest company which is a public company must end with—

(a) “community interest public limited company”, or

(b) “community interest p.l.c.”.

(4) In the case of a Welsh company, its name may instead end with—

(a) “cwmni buddiant cymunedol cyhoeddus cyfyngedig”, or

(b) “cwmni buddiant cymunedol c.c.c.”,

...

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Community interest company reports

34

(1) The directors of a community interest company must prepare in respect of each financial year a report about the company’s activities during the financial year (a “community interest company report”).

(2) Regulations must make provision requiring the directors of a community interest company to deliver to the registrar of companies a copy of the community interest company report.

(3) Regulations—

(a) must make provision requiring community interest company reports to include information about the remuneration of directors,

(b) may make provision as to the form of, and other information to be included in, community interest company reports, and

(c) may apply provisions of ... the Companies Act 2006 relating to directors' reports to community interest company reports (with any appropriate modifications).

(4) The registrar of companies must forward to the Regulator a copy of each community interest company report delivered to the registrar by virtue of this section.

Community interest test and excluded companies

35

(1) This section has effect for the purposes of this Part.

(2) A company satisfies the community interest test if a reasonable person might consider that its activities are being carried on for the benefit of the community.

(3) An object stated in the articles of a company is a community interest object of the company if a reasonable person might consider that the carrying on of activities by the company in furtherance of the object is for the benefit of the community.

(4) Regulations may provide that activities of a description prescribed by the regulations are to be treated as being, or as not being, activities which a reasonable person might consider are activities carried on for the benefit of the community.

(5) “Community” includes a section of the community (whether in the United Kingdom or anywhere else); and regulations may make provision about what does, does not or may constitute a section of the community.

(6) A company is an excluded company if it is a company of a description prescribed by regulations.

Becoming a community interest company

New companies

36

(1) If a company is to be formed as a community interest company, the documents delivered to the registrar of companies under section 9 of the Companies Act 2006 (registration documents) must be accompanied by the prescribed formation documents.

(2) The “prescribed formation documents” means such declarations or statements as are required by regulations to accompany the application, in such form as may be approved in accordance with the regulations.

(3) On receiving the documents delivered under that section and the prescribed formation documents, the registrar must (instead of registering the documents)—

(a) forward a copy of each of the documents to the Regulator, and

(b) retain the documents pending the Regulator’s decision.

Existing companies: requirements

37

(1) If a company is to become a community interest company—

(a) the company must by special resolution—

(i) state that it is to be a community interest company,

(ii) make such alterations of its articles as it considers necessary to comply with requirements imposed by and by virtue of section 32 or otherwise appropriate in connection with becoming a community interest company, and

(iii) change its name to comply with section 33;

(b) the conditions specified below must be met; and

(c) an application must be delivered to the registrar of companies in accordance with section 37C together with the other documents required by that section.

(2) The conditions referred to in subsection (1)(b) are that—

(a) where no application under section 37A for cancellation of the special resolutions has been made—

(i) having regard to the number of members who consented to or voted in favour of the resolutions, no such application may be made, or

(ii) the period within which such an application could be made has expired, or

(b) where such an application has been made—

(i) the application has been withdrawn, or

(ii) an order has been made confirming the resolutions and a copy of that order has been delivered to the registrar.

(3) Section 30 of the Companies Act 2006 (copies of resolutions to be forwarded to the registrar) applies to the special resolutions as follows—

(a) that section is complied with by forwarding copies of the resolutions together with the application in accordance with section 37C,

(b) copies of the resolutions must not be so forwarded before the relevant date, and

(c) subsection (1) of that section has effect in relation to the resolutions as if it referred to 15 days after the relevant date.

(4) The relevant date is—

(a) if an application is made under section 37A for cancellation of the special resolutions—

(i) the date on which the court determines the application (or if there is more than one application, the date on which the last to be determined by the court is determined), or

(ii) such later date as the court may order;

(b) if there is no such application—

(i) if having regard to the number of members who consented to or voted in favour of the resolutions, no such application may be made, the date on which the resolutions were passed or made (or, if the resolutions were passed or made on different days, the date on which the last of them was passed or made);

(ii) in any other case, the end of the period for making such an application.

Existing companies: decisions etc.

38

(1) The Regulator must decide whether the company is eligible to become a community interest company.

(2) A company is eligible to become a community interest company if—

(a) its articles as proposed to be amended comply with the requirements imposed by and by virtue of section 32,

(b) its proposed name complies with section 33, and

(c) the Regulator, having regard to the application and accompanying documents and any other relevant considerations, considers that the company—

(i) will satisfy the community interest test, and

(ii) is not an excluded company.

(3) The Regulator must give notice of the decision to the registrar of companies (but the registrar is not required to record it).

Existing companies: charities

39

(1) A company that is an English charity may not become a community interest company without the prior written consent of the Charity Commission.

(2) If a company that is an English charity contravenes subsection (1), the Charity Commission may apply to the High Court for an order quashing any altered certificate of incorporation issued under section 38A .

(3) If a company that is an English charity becomes a community interest company, that does not affect the application of—

(a) any property acquired under any disposition or agreement previously made otherwise than for full consideration in money or money’s worth, or any property representing property so acquired,

(b) any property representing income which has previously accrued, or

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Existing companies: Scottish charities

40

(1) A company that is a Scottish charity may not become a community interest company.

(2) If a company that is a Scottish charity purports by special resolution to change its name to comply with section 33, the Commissioners of Inland Revenue may apply to the Court of Session for an order quashing any altered certificate of incorporation issued under section 28(6) of the 1985 Act.

(3) Regulations may repeal subsections (1) and (2); and subsections (4) to (7) have effect on and after the day on which regulations under this subsection come into force.

(4) A Scottish charitable company may not become a community interest company without the prior written consent—

(a) if the company’s registered office is situated in Scotland, of the Scottish Charity Regulator, or

(b) if the company’s registered office is situated in England and Wales (or Wales), of both the Scottish Charity Regulator and the Charity Commission.

(5) If a company that is a Scottish charity contravenes subsection (4)(a), the Scottish Charity Regulator may apply to the Court of Session for an order quashing any altered certificate of incorporation issued under section 38A.

(6) If a company that is a Scottish charity contravenes subsection (4)(b), the Scottish Charity Regulator or the Charity Commission may apply to the High Court for such an order.

(7) If a company that is a Scottish charity becomes a community interest company, it shall continue to be under a duty to apply–

(a) any property previously acquired, or any property representing property previously acquired,

(b) any property representing income which has previously accrued, or

in accordance with its purposes as set out in its entry in the Scottish Charity Register immediately before it became a community interest company.

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supervision by Regulator

Conditions for exercise of supervisory powers

41

(1) In deciding whether and how to exercise the powers conferred by sections 42 to 51 the Regulator must adopt an approach which is based on the principle that those powers should be exercised only to the extent necessary to maintain confidence in community interest companies.

(2) No power conferred on the Regulator by—

(a) section 45 (appointment of director),

(b) section 46 (removal of director),

(d) section 48 (property),

is exercisable in relation to a community interest company unless the company default condition is satisfied in relation to the power and the company.

(3) The company default condition is satisfied in relation to a power and a company if it appears to the Regulator necessary to exercise the power in relation to the company because—

(a) there has been misconduct or mismanagement in the administration of the company,

(b) there is a need to protect the company’s property or to secure the proper application of that property,

(d) if the company has community interest objects, the company is not carrying on any activities in pursuit of those objects.

(4) The power conferred on the Regulator by section 49 (transfer of shares etc.) is not exercisable in relation to a community interest company unless it appears to the Regulator that the company is an excluded company.

Investigation

42

(1) The Regulator may—

(a) investigate the affairs of a community interest company, or

(b) appoint any person (other than a member of the Regulator’s staff) to investigate the affairs of a community interest company on behalf of the Regulator.

(2) Subsection (1)(b) is in addition to paragraph 5 of Schedule 3 (powers of Regulator exercisable by authorised members of staff) and does not affect the application of that paragraph to the Regulator’s power under subsection (1)(a).

(3) Schedule 7 (further provision about investigations under this section) has effect.

Audit

43

(1) The Regulator may by order require a community interest company to allow the annual accounts of the company to be audited by a qualified auditor appointed by the Regulator.

(2) A person is a qualified auditor if he is eligible for appointment as a statutory auditor under Part 42 of the Companies Act 2006 .

(3) Sections 499 to 501 of the Companies Act 2006 (auditor’s rights to information) apply in relation to an auditor appointed under this section ...

(4) On completion of the audit the auditor must make a report to the Regulator on such matters and in such form as the Regulator specifies.

(5) The expenses of the audit, including the remuneration of the auditor, are to be paid by the Regulator.

(6) An audit under this section is in addition to, and does not affect, any audit required by or by virtue of any other enactment.

Civil proceedings

44

(1) The Regulator may bring civil proceedings in the name and on behalf of a community interest company.

(2) Before instituting proceedings under this section the Regulator must give written notice to the company stating—

(a) the cause of action,

(b) the remedy sought, and

(3) Any director of the company may apply to the court for an order—

(a) that proposed proceedings are not to be instituted under this section, or

(b) that proceedings instituted under this section are to be discontinued.

(4) On an application under subsection (3) the court may make such order as it thinks fit.

(5) In particular the court may (as an alternative to ordering that proposed proceedings are not to be instituted under this section or that proceedings instituted under this section are to be discontinued) order—

(a) that the proposed proceedings may be instituted under this section, or the proceedings instituted under this section may be continued, on such terms and conditions as the court thinks fit,

(b) that any proceedings instituted by the company are to be discontinued, or

(c) that any proceedings instituted by the company may be continued on such terms and conditions as the court thinks fit.

(6) The Regulator must indemnify the company against any costs (or expenses) incurred by it in connection with proceedings brought under this section.

(7) Any costs (or expenses)—

(a) awarded to the company in connection with proceedings brought under this section, or

(b) incurred by the company in connection with the proceedings and which it is agreed should be paid by a defendant (or defender),

are to be paid to the Regulator.

Appointment of director

45

(1) The Regulator may by order appoint a director of a community interest company.

(2) The person appointed may be anyone whom the Regulator thinks appropriate, other than a member of the Regulator’s staff.

(3) A person may be appointed as a director of a company under this section—

(a) whether or not the person is a member of the company, and

(b) irrespective of any provision made by the articles of the company or a resolution of the company ....

(4) An order appointing a person to be a director of a company under this section must specify the terms on which the director is to hold office; and those terms have effect as if contained in a contract between the director and the company.

(5) The terms specified must include the period for which the director is to hold office, and may include terms as to the remuneration of the director by the company.

(6) A director appointed under this section has all the powers of the directors appointed by the company (including powers exercisable only by a particular director or class of directors).

(7) A director appointed under this section may not be removed by the company, but may be removed by the Regulator at any time.

(8) Where—

(a) a person is appointed to be a director of the company under this section, or

(b) a person so appointed ceases to be a director of the company,

the obligation which would otherwise be imposed on the company under section 167G(1) of the Companies Act 2006 (duty to notify registrar of change in directors) is instead an obligation of the Regulator.

(9) But if subsection (10) applies, section 167G(6) applies as if the period within which the Regulator must send a notification to the registrar of companies is 14 days from the date on which the Regulator receives notification under that subsection.

(10) Where a person appointed to be a director of the company under this section ceases to be a director of the company (otherwise than by removal under subsection (7)), the company must give notification of that fact to the Regulator in a form approved by the Regulator before the end of the period of 14 days beginning with the date on which the person ceases to be a director.

(11) If default is made in complying with subsection (10) an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

For this purpose a shadow director is treated as an officer of the company.

(12) A person guilty of an offence under subsection (11) is liable on summary conviction to a fine not exceeding level 5 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 5 on the standard scale one-tenth of the greater of £5,000 or level 4 on the standard scale .

(13) The company may appeal to the Appeal Officer against an order under this section.

Removal of director

46

(1) The Regulator may by order remove a director of a community interest company.

(2) If a person has been removed under subsection (1)—

(a) the company may not subsequently appoint him a director of the company, and

(b) any assignment to the person of the office of director of the company is of no effect (even if approved by special resolution of the company).

(3) The Regulator may by order suspend a director of the company pending a decision whether to remove him.

(4) The maximum period for which a director may be suspended under subsection (3) is one year.

(5) If the Regulator suspends a director under subsection (3) the Regulator may give directions in relation to the performance of the director’s functions.

(6) The Regulator may discharge an order made under subsection (1).

(7) The discharge of an order made under subsection (1) does not reinstate the person removed by the order as a director of the company, but on the discharge of the order subsection (2) ceases to apply to the person.

(8) The Regulator must from time to time review any order made under subsection (3) and, if it is appropriate to do so, discharge the order.

(9) Before making an order under subsection (1) or (3) in relation to a director, the Regulator must give at least 14 days' notice to—

(a) the director, and

(b) the company.

(10) Where an order is made in relation to a director under subsection (1) or (3) the director may appeal against the order—

(a) in England and Wales or Northern Ireland, to the High Court, or

(b) in Scotland, to the Court of Session.

(11) The Regulator must, before the end of the period of 14 days beginning with the date on which—

(a) an order under subsection (1) is made or discharged,

(b) an order under subsection (3) is made or discharged or expires, or

give notification of that event to the registrar of companies in a form approved by the registrar of companies.

(12) Where subsection (11) imposes an obligation to notify the registrar of companies of an event, section 167G(1) of the Companies Act 2006 (duty to notify registrar of change in directors) does not apply in respect of the event.

Appointment of manager

47

(1) The Regulator may by order appoint a manager in respect of the property and affairs of a community interest company.

(2) The person appointed may be anyone whom the Regulator thinks appropriate, other than a member of the Regulator’s staff.

(3) An order under subsection (1) may make provision as to the functions to be exercised by, and the powers of, the manager.

(4) The order may in particular provide—

(a) for the manager to have such of the functions of the company’s directors as are specified in the order, and

(b) for the company’s directors to be prevented from exercising any of those functions.

(5) In carrying out his functions the manager acts as the company’s agent; and a person dealing with the manager in good faith and for value need not inquire whether the manager is acting within his powers.

(6) The appointment of the manager does not affect—

(a) any right of any person to appoint a receiver or manager of the company’s property (including any right under section 51 of the Insolvency Act 1986 (c. 45) (power to appoint receiver under law of Scotland)), or

(b) the rights of a receiver or manager appointed by a person other than the Regulator.

(7) The manager’s functions are to be discharged by him under the supervision of the Regulator; and the Regulator must from time to time review the order by which the manager is appointed and, if it is appropriate to do so, discharge it in whole or in part.

(8) In particular, the Regulator must discharge the order on the appointment of a person to act as administrative receiver, administrator, provisional liquidator or liquidator of the company.

(9) The Regulator may apply to the court for directions in relation to any matter arising in connection with the manager’s functions or powers.

(10) On an application under subsection (9) the court may give such directions or make such orders as it thinks fit.

(11) The costs of any application under subsection (9) are to be paid by the company.

(12) Regulations may authorise the Regulator—

(a) to require a manager to make reports,

(b) to require a manager to give security (or, in Scotland, to find caution) for the due exercise of the manager’s functions, and

(13) Regulations may—

(a) provide for a manager’s remuneration to be payable from the property of the company, and

(b) authorise the Regulator to determine the amount of a manager’s remuneration and to disallow any amount of remuneration in circumstances prescribed by the regulations.

(14) The company may appeal to the Appeal Officer against an order under this section.

Property

48

(1) The Regulator may by order—

(a) vest in the Official Property Holder any property held by or in trust for a community interest company, or

(b) require persons in whom such property is vested to transfer it to the Official Property Holder.

(2) The Regulator—

(a) may order a person who holds property on behalf of a community interest company, or on behalf of a trustee of a community interest company, not to part with the property without the Regulator’s consent, and

(b) may order any debtor of a community interest company not to make any payment in respect of the debtor’s liability to the company without the Regulator’s consent.

(3) The Regulator may by order restrict—

(a) the transactions which may be entered into by a community interest company, or

(b) the nature or amount of the payments that a community interest company may make,

and the order may in particular provide that transactions may not be entered into or payments made without the Regulator’s consent.

(4) The vesting or transfer of property under subsection (1) does not constitute a breach of a covenant or condition against alienation, and no right listed in subsection (5) operates or becomes exercisable as a result of the vesting or transfer.

(5) The rights are—

(a) a right of reverter (or, in Scotland, the right of the fiar on the termination of a liferent),

(b) a right of pre-emption,

(d) a right of re-entry,

(e) a right of irritancy,

(f) an option, and

(g) any right similar to those listed in paragraphs (a) to (f).

(6) The Regulator must from time to time review any order under this section and, if it is appropriate to do so, discharge the order in whole or in part.

(7) On discharging an order under subsection (1) the Regulator may make any order as to the vesting or transfer of the property, and give any directions, which he considers appropriate.

(8) If a person fails to comply with an order under subsection (1)(b), the Regulator may certify that fact in writing to the court.

(9) If, after hearing—

(a) any witnesses who may be produced against or on behalf of the alleged offender, and

(b) any statement which may be offered in defence,

the court is satisfied that the offender failed without reasonable excuse to comply with the order, it may deal with him as if he had been guilty of contempt of the court.

(10) A person who contravenes an order under subsection (2) or (3) commits an offence, but a prosecution may be instituted—

(a) in England and Wales, only with the consent of the Regulator or the Director of Public Prosecutions;

(b) in Northern Ireland, only with the consent of the Regulator or the Director of Public Prosecutions for Northern Ireland.

(11) A person guilty of an offence under subsection (10) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.

(12) Subsections (8) to (10) do not prevent the bringing of civil proceedings in respect of a contravention of an order under subsection (1)(b), (2) or (3).

(13) The company and any person to whom the order is directed may appeal to the Appeal Officer against an order under subsection (1) or (2).

(14) The company may appeal to the Appeal Officer against an order under subsection (3).

Transfer of shares etc.

49

(1) If a community interest company has a share capital, the Regulator may by order transfer specified shares in the company to specified persons.

(2) If a community interest company is a company limited by guarantee, the Regulator may by order—

(a) extinguish the interests in the company of specified members of the company (otherwise than as shareholders), and

(b) appoint a new member in place of each member whose interest has been extinguished.

(3) An order under subsection (1) may not transfer any shares in respect of which—

(a) a dividend may be paid, or

(b) a distribution of the company’s assets may be made if the company is wound up.

(4) An order under this section in relation to a company—

(a) may only transfer shares to, and appoint as new members, persons who have consented to the transfer or appointment, and

(b) may be made irrespective of any provision made by the articles of the company or a resolution of the company in general meeting.

(5) The company and any person from whom shares are transferred by the order may appeal to the Appeal Officer against an order under subsection (1).

(6) The company and any person whose interest is extinguished by the order may appeal to the Appeal Officer against an order under subsection (2).

(7) “Specified”, in relation to an order, means specified in the order.

Petition for winding up

50

(1) The Regulator may present a petition for a community interest company to be wound up if the court is of the opinion that it is just and equitable that the company should be wound up.

(2) Subsection (1) does not apply if the company is already being wound up by the court.

(3) In section 124 of the Insolvency Act 1986 (c. 45) (application for winding up), after subsection (4) insert—

(4A) A winding-up petition may be presented by the Regulator of Community Interest Companies in a case falling within section 50 of the Companies (Audit, Investigations and Community Enterprise) Act 2004.

Dissolution and striking off

51

(1) If a community interest company has been—

(a) dissolved, or

(b) struck off the register under section 1000 or 1001 of the Companies Act 2006,

the Regulator may apply to the court under section 1029 of that Act for an order restoring the company’s name to the register.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) If an application under section 1003 of the Companies Act 2006 (striking off on application by company) is made on behalf of a community interest company, section 1006 of the Companies Act 2006 (persons to be notified of application) is to be treated as also requiring a copy of the application to be given to the Regulator.

Change of status

Re-registration

52

(1) A community interest company is excluded from re-registering under section 102 of the Companies Act 2006 (re-registration of limited company as unlimited).

(2) If a community interest company which is not a public company re-registers as a public company under section 90 of the Companies Act 2006 , or a community interest company which is a public company re-registers as a private company under section 97 of the Companies Act 2006 , the certificate of incorporation issued under section 96(2) or 101(2) of the Companies Act 2006 is to contain a statement that the company is a community interest company.

(3) The fact that the certificate of incorporation contains such a statement is conclusive evidence that the company is a community interest company.

Ceasing to be a community interest company

53

A community interest company may not cease to be a community interest company except by dissolution or as provided—

(a) by sections 54 to 55A (becoming a charity ...), or

(b) if regulations are made under section 56 (becoming a registered society ), by the regulations.

Becoming a charity or a Scottish charity: requirements

54

(1) If a company is to cease to be a community interest company and become a charity—

(a) the company must by special resolution—

(i) state that it is to cease to be a community interest company,

(ii) make such alterations of its articles as it considers appropriate, and

(iii) change its name so that it does not comply with section 33;

(b) the conditions specified below must be met; and

(c) an application must be delivered to the registrar of companies in accordance with section 54C together with the other documents required by that section.

(2) The conditions referred to in subsection (1)(b) are that—

(a) where no application under section 54A for cancellation of the special resolutions has been made—

(i) having regard to the number of members who consented to or voted in favour of the resolutions, no such application may be made, or

(ii) the period within which such an application could be made has expired, or

(b) where such an application has been made—

(i) the application has been withdrawn, or

(ii) an order has been made confirming the resolutions and a copy of that order has been delivered to the registrar.

(3) Section 30 of the Companies Act 2006 (copies of resolutions to be forwarded to the registrar) applies to the special resolutions as follows—

(a) that section is complied with by forwarding copies of the resolutions together with the application in accordance with section 54C,

(b) copies of the resolutions must not be so forwarded before the relevant date, and

(c) subsection (1) of that section has effect in relation to the resolutions as if it referred to 15 days after the relevant date.

(4) The relevant date is—

(a) if an application is made under section 54A for cancellation of the resolutions—

(i) the date on which the court determines the application (or if there is more than one application, the date on which the last to be determined by the court is determined), or

(ii) such later date as the court may order;

(b) if there is no such application—

(i) if having regard to the number of members who consented to or voted in favour of the resolutions, no such application may be made, the date on which the resolutions were passed or made (or, if the resolutions were passed or made on different days, the date on which the last of them was passed or made);

(ii) in any other case, the end of the period for making such an application.

Becoming a charity or a Scottish charity: decisions etc.

55

(1) The Regulator must decide whether the company is eligible to cease being a community interest company.

(2) A company is eligible to cease being a community interest company if it has complied with sections 54 and 54C and none of the following applies—

(a) the Regulator has under section 43 appointed an auditor to audit the company’s annual accounts and the audit has not been completed,

(b) civil proceedings instituted by the Regulator in the name of the company under section 44 have not been determined or discontinued,

(d) a director of the company is suspended under section 46(3),

(e) there is a manager in respect of the property and affairs of the company appointed under section 47,

(f) the Official Property Holder holds property as trustee for the company,

(g) an order under section 48(2) or (3) is in force in relation to the company,

(h) a petition has been presented for the company to be wound up.

(3) The Regulator must give notice of the decision to the registrar of companies (but the registrar is not required to record it).

Becoming an industrial and provident society

56

(1) Unless regulations make provision to the contrary, a community interest company may not convert itself into a registered society under section 115 of the Co-operative and Community Benefit Societies Act 2014 or section 62 of the Industrial and Provident Societies Act (Northern Ireland) 1969.

(2) If regulations make provision allowing the conversion of community interest companies under that section they may include provision modifying that section in its application by virtue of the regulations.

Supplementary

Fees

57

(1) Regulations may require the payment of such fees in connection with the Regulator’s functions as may be specified in the regulations.

(2) The regulations may provide for fees to be paid to the registrar of companies (rather than to the Regulator).

(3) The Regulator may charge a fee for any service which is provided otherwise than in pursuance of an obligation imposed by law, other than the provision of guidance which the Regulator considers to be of general interest.

(4) Fees paid by virtue of this section are to be paid into the Consolidated Fund.

Extension of provisions about registrar etc.

58

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information

59

(1) Regulations may require the registrar of companies—

(a) to notify the Regulator of matters specified in the regulations, and

(b) to provide the Regulator with copies of documents specified in the regulations.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) In section 31(2) of the Data Protection Act 1998 (c. 29) (restricted access to data processed for specified purposes)—

(a) in paragraphs (b), (c) and (d), after “charities” insert “ or community interest companies ”, and

(b) in paragraph (b), after “trustees” insert “ , directors ”.

(4) A public authority may disclose to the Regulator, for any purpose connected with the exercise of the Regulator’s functions, information received by the authority in connection with its functions.

(5) The Regulator may disclose to a public authority any information received by the Regulator in connection with the functions of the Regulator—

(a) for a purpose connected with the exercise of those functions, or

(b) for a purpose connected with the exercise by the authority of its functions.

(6) In deciding whether to disclose information to a public authority in a country or territory outside the United Kingdom the Regulator must have regard to the considerations listed in section 243F(2) and (3) of the Enterprise Act 2002 (c. 40) (relevant considerations relating to overseas disclosures), but as if the reference to information of a kind to which section 237 of that Act applies were to information of the kind the Regulator is considering disclosing.

(7) The powers to disclose information in subsections (4) and (5) are subject to—

(a) any restriction on disclosure imposed by or by virtue of an enactment, and

(b) any express restriction on disclosure subject to which information was supplied.

(8) Information may be disclosed under subsection (4) or (5) subject to a restriction on its further disclosure.

(9) A person who discloses information in contravention of a restriction imposed under subsection (8) is guilty of an offence, but a prosecution may be instituted—

(a) in England and Wales, only with the consent of the Regulator or the Director of Public Prosecutions;

(b) in Northern Ireland, only with the consent of the Regulator or the Director of Public Prosecutions for Northern Ireland.

(10) A person guilty of an offence under subsection (9) is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

(11) “Public authority” means a person or body having functions of a public nature.

Offences

60

(1) If an offence under section 48 or 59 or paragraph 5 of Schedule 7 committed by a body corporate is proved—

(a) to have been committed with the consent or connivance of an officer, or

(b) to be attributable to any neglect on the part of an officer,

the officer as well as the body corporate is guilty of the offence and liable to be proceeded against and punished accordingly.

(2) “Officer” means a director, manager, secretary or other similar officer of the body corporate, or a person purporting to act in any such capacity.

(3) “Director”—

(a) includes a shadow director, and

(b) if the affairs of a body corporate are managed by its members, means a member of the body.

Orders made by Regulator

61

(1) An order made by the Regulator under this Part must be given to the community interest company in relation to which it is made and—

(a) if the order is under section 46(1) or (3), to the director removed or suspended,

(b) if the order is under section 48(1)(b) or (2), to the person to whom the order is directed,

(d) if the order is under section 49(2), to the person whose interest is extinguished and any person appointed in his place.

(2) Orders made by the Regulator under or by virtue of this Part may contain any incidental or supplementary provisions the Regulator considers expedient.

(3) When discharging an order made under or by virtue of this Part, the Regulator may make savings and transitional provisions.

(4) A document certified by the Regulator to be a true copy of an order made by the Regulator is evidence of the order without further proof; and a document purporting to be so certified shall, unless the contrary is proved, be taken to be so certified.

(5) Where the Regulator makes an order or decision against which an appeal lies under or by virtue of this Part, the Regulator must give reasons for the order or decision to the persons entitled to appeal against it.

Regulations

62

(1) Any power to make regulations under this Part is exercisable by the Secretary of State by statutory instrument.

(2) Regulations under this Part may make different provision for different cases.

(3) Regulations under this Part may confer or impose functions on the Regulator or any other person specified in the regulations (and, unless made under paragraph 4 of Schedule 4, may provide for appeals to the Appeal Officer from a person on whom functions are conferred by the regulations).

(4) No regulations to which this subsection applies are to be made unless a draft of the statutory instrument containing the regulations (whether or not together with other provisions) has been laid before, and approved by a resolution of, each House of Parliament.

(5) Subsection (4) applies to regulations under—

(a) section 30,

(b) section 31,

(d) section 34,

(e) section 35,

(f) section 36,

(g) section 37C ,

(h) section 47, and

(i) section 56.

(6) A statutory instrument containing regulations under this Part is (unless a draft of it has been approved by each House of Parliament under subsection (4)) subject to annulment in pursuance of a resolution of either House of Parliament.

Interpretation

63

(1) In this Part—

“administrative receiver” has the meaning—

(a) in England and Wales or Scotland, by section 251 of the Insolvency Act 1986, and

(b) in Northern Ireland, by Article 5 of the Insolvency (Northern Ireland) Order 1989;

“the Appeal Officer” has the meaning given by section 28(1),

“charity” means an English charity, a Scottish charity or a Northern Ireland charity, as defined below;

“community interest object” is to be construed in accordance with section 35(3),

“the community interest test” is to be construed in accordance with section 35(2),

“enactment” includes an Act of the Scottish Parliament,

“English charity” means a charity as defined by section 1(1) of the Charities Act 2011;

“excluded company” is to be construed in accordance with section 35(6),

“Northern Ireland charity” means a charity within the meaning of the Charities Act (Northern Ireland) 2008 (see section 1 of that Act);

“the Official Property Holder” has the meaning given by section 29(1),

“the Regulator” has the meaning given by section 27(1), and

“Scottish charity” means a body entered in the Scottish Charity Register.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 3 — Supplementary

Repeals and revocations

64

Schedule 8 (repeals and revocations) has effect.

Commencement etc.

65

(1) This Act (apart from this section and sections 66 and 67) does not come into force until such day as the Secretary of State may by order made by statutory instrument appoint; and different days may be appointed for different provisions or otherwise for different purposes.

(2) The Secretary of State may by order made by statutory instrument make any transitional provisions or savings which appear appropriate in connection with the commencement of any provision of this Act.

Extent

66

(1) Any amendment made by this Act has the same extent as the provision to which it relates.

(2) Sections 14, 15(1)(b), (3) and (7) and 16 to 18A and Part 2 extend to Northern Ireland.

(3) Subject to that, this Act (apart from section 65, this section and section 67) does not extend to Northern Ireland.

Short title

67

This Act may be cited as the Companies (Audit, Investigations and Community Enterprise) Act 2004.

SCHEDULE 1

In the Companies Act 1985 (c. 6), after Schedule 7A insert—

SCHEDULE 2

Part 1 — Amendments relating to auditors

Companies Act 1989 (c. 40)

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Companies (Northern Ireland) Order 1990 (S.I. 1990/593(N.I. 5))

4

In the Companies (Northern Ireland) Order 1990, omit Article 49 and Schedule 14 (supervisory and qualifying bodies: restrictive practices).

Part 2 — Amendments relating to accounts and reports

Companies Act 1985 (c. 6)

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6))

11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 3 — Amendments relating to investigations

Companies Act 1985 (c. 6)

16

The Companies Act 1985 has effect subject to the following amendments.

17

After section 447 insert—

(447A) (1) A statement made by a person in compliance with a requirement under section 447 may be used in evidence against him. (2) But in criminal proceedings in which the person is charged with a relevant offence— (a) no evidence relating to the statement may be adduced by or on behalf of the prosecution, and (b) no question relating to it may be asked by or on behalf of the prosecution, unless evidence relating to it is adduced or a question relating to it is asked in the proceedings by or on behalf of that person. (3) A relevant offence is any offence other than the following— (a) an offence under section 451, (b) an offence under section 5 of the Perjury Act 1911 (false statement made otherwise than on oath), or (c) an offence under section 44(2) of the Criminal Law (Consolidation) (Scotland) Act 1995 (false statement made otherwise than on oath).

18

For section 449 substitute—

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.

Companies (Audit, Investigations and Community Enterprise) Act 2004

Part 1 — Auditors, accounts, directors' liabilities and investigations

Chapter 1 — Auditors

Recognised supervisory bodies

Minor and consequential amendments

1

Arrangements to which additional requirements for recognition relate

2

Delegation of Secretary of State’s functions in relation to auditors

Delegation of functions by Secretary of State to new or existing body

3

Circumstances in which Secretary of State may delegate functions to existing body

4

Supplementary provisions about delegation orders

5

Auditors' qualifications

Approval of overseas qualifications for auditors

6

Services provided by auditors

Disclosure of services provided by auditors and related remuneration

7

Chapter 2 — Accounts and reports

Auditing of accounts

Auditors' rights to information

8

Statement in directors' report as to disclosure of information to auditors

9

Defective accounts

Persons authorised to apply to court in connection with defective accounts

10

Disclosure of tax information by Inland Revenue to facilitate application for declaration that accounts are defective

11

Power of person authorised to require documents, information and explanations

12

Directors' reports

Power to specify bodies who may issue reporting standards

13

Supervision of accounts and reports

Supervision of periodic accounts and reports of issuers of listed securities

14

Application of provisions inserted by sections 11 and 12 to bodies appointed under section 14

15

Bodies concerned with accounting standards etc.

Grants to bodies concerned with accounting standards etc.

16

Levy to pay expenses of bodies concerned with accounting standards etc.

17

Exemption from liability

18

Chapter 3 — Directors' liabilities

Relaxation of prohibition on provisions protecting directors etc. from liability

...

Funding of director’s expenditure on defending proceedings

20

Chapter 4 — Investigations

Power to require documents and information

21

Protection in relation to certain disclosures

22

Power to enter and remain on premises

23

Failure to comply with certain requirements

24

Chapter 5 — Supplementary

Minor and consequential amendments

25

Part 2 — Community interest companies

Introductory

Community interest companies

26

Regulator

27

Appeal Officer

28

Official Property Holder

29

Requirements

Cap on distributions and interest

30

Distribution of assets on winding up